121 horizontal strategic behavior Nov 2007

121 horizontal strategic behavior Nov 2007 - Strategic...

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Strategic Behavior Econ 121 Fall 2007 Joseph Farrell
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GE-Westinghouse • Large turbine generators – Few sales, each one big – Few producers: GE, W, Allis-Chalmers to ’62 – Pressure to agree to discounts – Complex set of products and prices • Just agree on prices? – Fines and jail – More severe treatment now – Leniency policy and Nate’s research
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GE’s Bold Move • May 1963: announce new pricing policy – Price book; multiplier – Price protection plan and auditing • Who’s the target audience? • Would Westinghouse “match” or “undercut”? • Was this legal? 1977 settlement
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Ethyl • “Lead” in gas: declining market (EPA ban) • Capacity cost and utilization cost • Four firms • Price history: why not falling?
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• Price-matching guarantees • What did direct customers care about? – Given the price-matching • Model of industry input cost and profit – Attitude to price-matching? • Was this legal?
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This note was uploaded on 09/29/2008 for the course ECON 121 taught by Professor Woroch during the Fall '07 term at Berkeley.

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121 horizontal strategic behavior Nov 2007 - Strategic...

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